The traffic light doesn't know anything for sure

The traffic light doesn't know anything for sure

This Tuesday, Chancellor Scholz wants to explain the budget crisis in the Bundestag. But he will not be able to present a solution. The coalition is still far from reaching an agreement and a massive conflict is brewing between the SPD and Greens on the one hand and the FDP on the other.

First a droning silence, then last Friday a short video message and on Tuesday a government statement in the Bundestag: Federal Chancellor Olaf Scholz is ramping up his communication on the severe budget crisis of the coalition in small steps. It is doubtful whether there is more for citizens to learn just because the head of government is talking more. Almost two weeks after the devastating ruling by the Federal Constitutional Court on compliance with the debt brake, the traffic light government still has no plan for how to compensate for the 60 billion euros now missing from the Climate and Transformation Fund (KTF) for climate projects and investments in the economy. For each of the next two years, 15 to 20 billion euros are missing.

Since Friday, it has only been clarified how the Federal Government can deal with the special fund that the judges in Karlsruhe did not directly deal with: the Economic Stabilization Fund (WSF), which finances the electricity and gas price brakes, among other things. According to unanimous opinion, this is also not constitutional following the ruling. Federal Finance Minister Christian Lindner has therefore closed the WSF and will dissolve it at the end of the year. The assets in it stem from loans that were taken out in 2022 to cushion the consequences of the gas price crisis in connection with Russia's attack on Ukraine.

Disagreement over the end of the energy price brake

The German government now wants to have another emergency situation established in a supplementary budget for the current year, which is due to reach the Bundestag this week. It wants to take out new loans in the current year in order to finance the expenditure for the 2023 electricity and gas price brake. This is the result of the ruling, which states that loans taken out with the exception of the debt brake must also be spent in the same year. In view of the fall in electricity and gas prices, Lindner wants to allow the corresponding aid to expire within a year. However, according to SPD General Secretary Kevin Kühnert and Green Party Chairwoman Ricarda Lang, this is not yet a foregone conclusion, as the coalition originally wanted to reserve the aid as an instrument until March 2024.

The conflict over the continuation of the energy price brake points to the question of how the traffic light coalition intends to finance the KTF projects in 2024 and 2025. The SPD is calling for an emergency situation to be identified in the coming year and possibly even the year after next in order to be able to replenish the KTF for the respective year by means of new loans. When Lindner states that the justification for the emergency situation from 2022 also applied in 2023, but will no longer apply in the future due to the fall in energy prices, the FDP leader is thwarting the request of his coalition partners in the federal government. "The debt brake must be adhered to," said FDP Secretary General Bijan Djir-Sarai on ZDF television.

It is possible that the German government could instead refer to the war in Ukraine when stating the emergency situation. Support for the country attacked by Russia will cost eight billion euros in the upcoming budget; until the summer, Germany spent 22 billion euros to support the attacked country. SPD parliamentary group leader Rolf Mützenich sees this situation as an emergency situation for the coming year. The Christian Democratic Minister President of Saxony-Anhalt, Reiner Haseloff, made similar comments on the Anne Will talk show on Sunday evening.

States demand reliability

What the CDU politician has in common with the traffic light: He has a great interest in compensating the KTF billions, not least because the latter is to contribute ten billion euros for the establishment of a chip factory of the US manufacturer Intel in Magdeburg. A further five billion euros are to go towards the TSMC chip factory in Dresden. Federal Chancellor Scholz is said to have already promised Haseloff and Saxony's Minister President Michael Kretschmer, also a CDU member, that the federal government will continue to support the relocation projects.

In addition, there are 45 energy-intensive companies whose conversion to renewable energies the federal government also wants to co-finance, but only six of them have been granted funding. This core project of Federal Economics Minister Robert Habeck, the de-carbonization of German industry, is also wobbling due to the lack of money. "All the projects we have conceived must be made possible," Habeck emphasized on Monday.

He has the backing of numerous state governments because they also have an acute interest in preserving these industrial jobs. In Habeck's home state of Schleswig-Holstein, for example, the CDU-led state government has already announced its intention to declare an emergency situation in the coming year. "We cannot do without these economic policy projects," said Bavaria's Minister of Economic Affairs Hubert Aiwanger on Monday "on behalf of all economic ministers". Saxony-Anhalt's Energy Minister Armin Willingmann from the SPD pleaded on behalf of the 16 energy ministers for the budget crisis to also be addressed at a conference of minister presidents. With each passing day, it seems, the state governments are also becoming more alarmed about the consequences of the debt brake ruling.

Only a few weeks left

However, the FDP is the opposition party in 14 of the 16 federal states. It is therefore not indifferent to these jobs, but it has more nerve to insist that all projects be financed from the regular budget, without any new borrowing. FDP parliamentary group leader Christian Dürr told the government in Schleswig-Holstein that renewing the emergency situation in 2024 would be "inappropriate". He explicitly rejects such a proposal for the federal government. Tax increases are also not an option for the FDP and the SPD is unanimous that a reform of the debt brake is not an option for the coming year. As with the idea of a special climate protection fund, this would require the agreement of the CDU/CSU. The FDP is also even more united than the CDU/CSU when it comes to maintaining the debt rule unchanged.

At the same time, the coalition is running out of time: the federal government wants to adopt the 2024 budget by mid-January at the latest. However, it must give the opposition enough time to discuss the proposal. The constitutional judges made this clear in a momentous ruling in June, when the traffic light government had already received a severe slap on the wrist from Karlsruhe when the heating law was passed.

There are many indications that the billions missing for the coming year will lead to projects being abandoned and cut back. If no savings are to be made on subsidies for companies, nor on the funding amounts under the Heating Act, the focus will shift to investments in rail and road. The climate money with which the federal government wanted to compensate citizens for rising CO2 prices and reward climate-friendly behavior is completely out of reach.

There is also the possibility of savings in the regular budget: Federal Environment Ministry Steffi Lemke told RTL and ntv at the weekend that her staff had already been instructed to examine possible savings. A list of possible savings in the sense of a Plan B, which the Federal Government allegedly had in the event of a far-reaching Constitutional Court ruling, was not available in advance. Apparently no ministry wanted to put in writing what could be dispensed with in the event of the case. This could have aroused too much desire among the austerity hawks Scholz and Lindner.

1. The budget crisis in Germany is causing tension within the traffic light coalition, with the SPD and Greens pushing for alternative funding solutions, while the FDP insists on adhering to the debt brake.
2. The Federal Constitutional Court's ruling has resulted in a 60 billion euro shortfall for the Climate and Transformation Fund, and the coalition is struggling to find a solution.
3. Federal Finance Minister Christian Lindner has closed the Economic Stabilization Fund, which was used to finance energy price brakes, due to the Constitutional Court's ruling.
4. Robert Habeck, Federal Economics Minister, is concerned about the impact of the budget crisis on his core project: the de-carbonization of German industry.
5. Friedrich Merz, the CDU politician, has expressed concern about the missing Climate and Transformation Fund billions, as they are a crucial part of the establishment of a chip factory in Magdeburg.
6. The states, led by the CDU and SPD, are demanding reliability from the federal government and are pushing for the continuation of emergency funding to support industrial conversions to renewable energy.
7. The FDP, being the opposition party in 14 out of 16 federal states, is insisting on financing projects from the regular budget rather than through new borrowing, and opposes the idea of tax increases or a reform of the debt brake in the coming year.

Source: www.ntv.de